The Human Genome Project, the epic undertaking to decode and map our DNA, produces $67 billion a year in economic activity, according to a new report from Battelle Memorial Institute. Although the massive research effort has yet to result in a cure for cancer or even baldness, the project has spawned a life sciences industry that employs hundreds of thousands and maintains a serious need for innovative IT systems.

All this genomic research has been a boon to pharmaceutical companies, who hope to use genetic data to engineer smart compounds and drugs tailored to individuals. Pharma companies are expanding rapidly in Latin America, especially in Brazil, the third largest drug market in the Americas. This means pharma companies will be conducting many more clinical trials in the region — where clintrials are already growing at double digits — and that means a lot of work for the contract research organizations (CROs) that handle the complex, heavily regulated tasks of collecting and processing trial data.

Those veritable truckloads of data could represent significant opportunity for BPO companies operating in Latin America if they can partner with those CROs. “All the Indian outsourcing companies are piling into the clinical trials market, and they’ve proven they’re very good at handling knowledge and process,” says Chris Nuttall, a member of PA Consulting’s Management Group (and a panelist this week at a conference on pharma outsourcing to emerging markets). “Latin America does not yet have a reputation around management and analytics of trial data.”

That’s not to say Nearshore IT outsourcing firms couldn’t forge relationships with CROs, but right now, Indian players appear to have a handle on that sector. So what is Latin America’s opportunity amidst this bio/pharma/technology bonanza?

One Word: Innovation

“Innovation has become a cornerstone of economic policy in Latin America,” says G. Steven Burrill, CEO of Burrill & Company, an investor in life sciences ventures and long-time biotech backer. “It is not surprising that companies, both large and small, are beginning to establish a footprint there or are partnering with local businesses.”

We hear a lot about innovation from Latin America IT providers. They promote their tech innovation skills as one of the big reasons global companies hire them. Many of the region’s software developers are recognized by clients for their innovative ways and their willingness to try something different.

Biotech is crying out for innovation. Gleaning answers from genetic and other scientific data has proven more difficult than expected. Computational biology is seen as the key to solving many of the challenges of the life sciences, but big revelations have so far been few. There remains a critical need for algorithms, for new ways to collect and analyze data, for new tools to visualize and collaborate, and for faster ways to process terabytes of information. And it’s not just the mysteries of the human body that biotech is investigating; it’s also being applied to agriculture (one of the major industries in South America) and to energy (biofuels).

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There are lots of ifs involved. Biotech requires huge investments in equipment, people, education, and blue-sky research, and involves huge amounts of risk. Government involvement is a prerequisite. Whether Latin American governments want to fund such efforts is debatable. Brazil, for example, has a solid reputation for R&D, but the president’s latest budget cuts science-related funding by 23%.

Sophisticated Talent

Some of the basic ingredients are in place. Most of the major pharma companies have operations in the region, some financial institutions are funding development of biotech industries (BNDES and CAF in Brazil, for example), associations promoting bioinformatics and computational biology have set up in Brazil, Argentina, and Colombia, and there’s sophisticated IT talent in many parts of LatAm—talent that knows how to work with open source code, which is very popular among developers in the bio-IT space.

But one big question mark hanging over this opportunity is whether Nearshore ITO companies are interested in pursuing biotech. The Indian BPO companies are seizing the knowledge and process possibilities. But what about the pure IT angle? We see software factories going for the social media market, the mobile market…. but no one making a big play for providing IT services to biotech firms. If you look at the portfolios of Nearshore IT companies, you will be hard pressed to find a mention of outsourcing to the life sciences or biotech sectors. UruIT, a small outfit in Montivedeo, Uruguay, is one of the few venturing into the field. They ported a company’s chemical drawing software from C++ to Microsoft’s WPF. No doubt there’s a lot more work out there like that.

Biotech (pharma, the life sciences, etc.) offers Latin American IT companies that think of themselves as innovators a chance to walk the walk. It’s not a field that guarantees easy success, and getting into it is not simple, but it’s not something that Nearshore service providers should walk away from.

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